Our cloud survey set out to investigate how hedge funds and investment management firms are using cloud services today, as well as to provide insight into the factors influencing this trend and also the barriers to adoption. Here’s a look at some of the findings:

Respondent Profile

Our online survey, which was conducted between March and May of 2012, surveyed 125 financial services firms in the United States. Of those 125 firms, 65 percent identified as investment management firms. Additional firm types represented included hedge funds (16%), private equity firms (16%) and fund-of-funds (4%).

The majority of respondent were large firms, with 34 percent reporting they currently manage over $1 billion in assets. Twenty-one percent (21%) of firms are managing assets between $500 and $999 million, and 25 percent between $100 and $499 million. The smallest assets under management (AUM) class represented was firms with less than $100 million in assets – a total of just 15 percent.

Current & Future Use of the Cloud

Of the 125 firms surveyed, 79 percent responded that they were currently using the cloud. When asked how they were currently utilizing cloud services (multiple responses were accepted), 65 percent indicated they were using the cloud for basic business/office functionality. This is a popular trend for investment firms of all kinds, particularly as they get started. Basic office functions that can be leveraged via the cloud include email, file services, storage and mobility functions.

The second most popular use of the cloud for current users was financial application hosting, with 50 percent of firms reporting use of this practice. Financial application hosting in the cloud offers financial firms several advantages to the traditional practice of running and managing an application on an in-house server. With the cloud, firms can leverage the enterprise-grade infrastructure of a third-party provider who is also responsible for the management and monitoring of that application within the cloud environment. Scalability is a factor as well. A hosted platform can provide virtually unlimited computing resources and easy expandability to support a firm’s need to add users or increase resources on-the-fly.

Firms are also using the cloud for complete IT outsourcing (22%) and other infrastructure and application services (35%).

First Cloud Initiative

As we’ve seen, financial firms are utilizing the cloud in a variety of ways. But what was their first cloud initiative? Similar to how firms are currently using the cloud, the first cloud initiative for 57 percent of firms was basic business and office functionality. Thirty-four percent (34%) of respondents said they first used the cloud to host their key financial applications, and only nine percent (9%) opted for complete IT outsourcing to the cloud on their first try.

Cloud Deployment Models

When it comes to cloud deployment models, investment firms continue to rely on a variety of models. The most common choice, however, is a private cloud. While not all private clouds are alike, they are often better suited for hedge funds and investment firms who require a great deal of sophistication, application integration and support.

Of current cloud users, the overwhelming majority (71%) indicated they were using a private cloud solution. Hybrid clouds are the second most popular choice at 37 percent, while public cloud users totaled 33 percent. Additionally, 7 percent of respondents were unsure of their current cloud deployment model.

For those who are not yet using the cloud but are planning to, the responses tended to mirror those of current users. Forty-six percent (46%) of prospective cloud users anticipated using a private cloud solution, while only 23 percent said they would likely use a public cloud. Thirty-one percent (31%) will opt for a hybrid solution when they make the move to the cloud.

Read Part Two of our survey results to learn more about factors influencing cloud decisions, barriers to cloud adoption and top evaluation criteria for cloud services providers. You can also download our full survey report here.